Checks Year 1 Year 2 Year 3 Steps C1: NI - Dividends - Change in RE = 0 14 C2: Net cash flow - Change in cash = 0 C3: A - (L + E) = 0 Inputs Year 1 Year 2 Year 3 Balance sheet Gross receivables [ No allowance] 30.00 160.00 315.00 Inventories 55.00 31.00 108.00 Prepaid insurance or deferred insurance expense 93.00 74.00 117.00 Net PP&E 266.00 256.00 277.00 Deferred revenues 55.00 65.00 72.00 Accounts payable to suppliers 27.00 35.00 19.00 Accrued salaries or salary payable 70.00 166.00 278.00 Tax payable 10.08 13.04 10.72 Operating cash flows Cash received from customers 1240.00 1345.00 1442.00 Cash (paid) to suppliers of inventory -200.00 -210.00 -290.00 16 Cash (paid) for salaries -330.00 -402.00 -600.00 21 Cash (paid) for insurance -350.00 -270.00 -367.00 25 Taxes (paid) -90.72 -127.44 -109.52 33 Investing cash flow (Purchase of PP&E or capital expenditures) -400.00 -100.00 -110.00 29 Financing cash flow Stock issued 500.00 25.00 35.00 37 (Dividends ) paid 10.00 -11.00 -12.00 40 Derived income statement Year 1 Year 2 Year 3 2 = Cash received from customers [Positive number] 45 C1-C3 + Change in receivables 48 C1-C3 - Change in deferred revenues 10 = Sales revenues 18 = Cash (paid) to suppliers [Payments are negative numbers.] 51 C1-C3 - Change in payable =_Subtotal_(purchases) 54 C1-C3 + Change in inventory 20 C1-C3 = (COGS) [Expenses are negative numbers here.] 23 = Salary (paid) [Payments are negative numbers.] 57 C1-C3 - Change in salary payable 24 C1-C3 = (Salary expense) [Expenses are negative numbers here.] 27 = Insurance (paid) [Payments are negative numbers. ] 60 C1-C3 + Change in prepaid insurance 28 C1-C3 = Insurance (expense) [Expenses are negative numbers here.] 31 = (Capex) [Payments are negative numbers.] 63 C1-C3 + Change in net PPE 32 C1-C3 (Depreciation expense) [Expenses are negative numbers here.] 11 35 = tax (paid) [Payments are negative numbers.] 66 C1-C3 - Change in taxes payable [Assume no deferred taxes] 36 C1-C3 = (Current tax expense) [Expenses are negative numbers here.] 12 = Net income [Revenues + expenses because expenses are negative numbers here.]Ending balance sheet Year 1 Year 2 Year 3 Cash 7c2 Previous cash + Met cash flow Gross receivables [No allowance] 44 Given Inventories 53 Given Prepaid insurance or deferred insurance expense 59 Given Met PP&E 62 Given Deferred revenues 47 Given Accounts payable to suppliers 50 Given Accrued salaries or salary payable 56 Given Tax payable 65 Given Contributed capital 39 C1-C3 Previous capital + Stock issued [13] Previous retained earnings + Net income Retained earnings 13 1-C3 42 C1-C3 [42] + (Dividends) Cash-flow statement Year 1 Year2 Year 3 Cash received from customers 2 Given Cash (paid) to suppliers of inventory 17 Given Cash (paid) for salaries 23 Given Cash (paid) for insurance 26 Given Taxes (paid) 34 Given =0Operating cash flaw "3 Subtotal (Purchase of PP&E or capital expenditures) 30 Given = Investing cash flow ra Subtotal Stock issued 38 Given (Dividends) paid 41 Given = Financing cash flow 5 Subtotal = Net cash flow 5 Subtotal Income Statement Make sure you read the pdf linked above Year 1 Year 3 (THREE) Sales COGS [No - before the number.] Salary expense [No - before the number.] Insurance expense [No - before the number.] Depreciation expense [No - before the number.] Current tax expense [No deferred taxes; No - before the number.]